Overview
This lecture examines the transformation of American agriculture during the Gilded Age, focusing on technological innovation, market changes, and the resulting hardships for small farmers.
Jefferson's Yeoman Farmer Ideal
- Thomas Jefferson envisioned the ideal American as an independent yeoman farmer valuing liberty and freedom.
- This ideal began to shift as industrialization increased, making agriculture a smaller share of total production.
Early Farmer Prosperity and Innovation (1860s-1870s)
- Farmers initially prospered, aided by innovations like John Deere’s steel plow, which combined steel and plow technology for greater efficiency.
- Individual farmers operated in perfectly competitive markets, making them price takers with perfectly elastic demand curves.
- Adoption of new tools like the steel plow lowered individual farmers’ marginal costs, increasing production, producer surplus, and total revenue.
Bonanza Farming and Industry Shifts (1880s-1890s)
- Large-scale "bonanza" farms emerged, specializing in single crops and using technological advances to outcompete small farmers.
- Industry-wide adoption of new technology shifted the supply curve right, increasing output but lowering prices due to inelastic demand for food.
- Total revenue for the industry fell because price decreased significantly while quantity increased only slightly.
Decline of the Yeoman Farmer
- Increased global competition (more European farms, higher European tariffs on U.S. exports) further reduced prices.
- Small farmers faced falling demand and revenues, forcing them to reduce production.
- As large farms thrived, small farmers were pushed out, similar to how big industry leaders squeezed out smaller competitors.
Technological Change: Substitutes vs. Complements
- In agriculture, technological advances made labor and capital substitutes, reducing the need for small farmers.
- In manufacturing, labor and capital were complements, so workers benefited from new technology.
Farmer Response and Next Steps
- With declining prospects, small farmers began seeking government intervention to support their livelihoods.
Key Terms & Definitions
- Yeoman farmer — an independent, self-sufficient small-scale farmer.
- Perfect competition — a market structure where individual sellers are price takers with no market power.
- Producer surplus — the difference between what a producer earns and their minimum acceptable price.
- Bonanza farm — a large-scale farm specializing in one crop and using efficient, mechanized methods.
- Inelastic demand — when quantity demanded changes little as price changes.
- Substitutes of production — inputs that can replace each other, such as labor and machinery.
Action Items / Next Steps
- Review the impacts of technological change on agriculture.
- Prepare for the next lecture on government intervention in farming.